The Case for Capitalism, Part III

August 28, 2020 by Dan Mitchell @ International Liberty

Part I of this series featured Dan Hannan explaining how the emergence of capitalism led to mass prosperity, while Part II featured Madeline Grant explaining how competition and cooperation make markets so successful. Today, in Part III, Andy Puzder compares capitalism with socialism.

The core theoretical argument in the video is that capitalism is based on serving the needs of consumers. As captured by one of my favorite quotes from Professor Walter Williams, you only make yourself better off in a free market system by serving others.

 

In a socialist system, by contrast, the only people who get rich are the government elites who plunder the people.  I also like that the video explains that Nordic nations are not socialist. As I’ve also pointed out, there’s no government ownership, central planning, and price controls in nations such as Sweden and Denmark.  Those countries do have higher tax burdens and more costly welfare states, which is the main reason they generally rank below the United States in measures of national
economic liberty.

More important, the larger fiscal burden in Scandinavia help to explain why Americans enjoy higher living standards.  Indeed, my one complaint about the above video is that it didn’t show any of the data about relative levels of prosperity.

Yes, I want people to understand that Nordic nations have market-based economies, but I also want them to understand that those countries could be significantly more prosperous with less-onerous fiscal policy.

The most powerful data in that regards comes from a Swedish researcher who put together data showing that Americans of Scandinavian descent are much richer than their counterparts who are still in Scandinavia.

So the moral of the story is not only that capitalism is better than socialism, but also that capitalist nations with medium-sized governments do better than capitalist nations with large-sized governments.

P.S. Needless to say, capitalist jurisdictions with small-sized government do best of all.